Key takeaways
- Establish the contractual time-saved basis before applying the rate.
- Reconstruct the relevant post-completion timeline under the adopted assumptions.
- Keep the allowance balance, expiry and payment measure distinguishable.
- Verify any calendar information that affects the method.
- Review the calculation as a contractual model, not merely a subtraction exercise.
Locate the agreed definition
BIMCO includes despatch in its laytime and demurrage programme. The models below are expressly defined fictional arrangements. Confirm the actual contract's method rather than adopting either model by default; check the current text with appropriate advice.
The account preparer should identify the relevant term in the charter, recap and amendments. If an internal template has a default method, confirm that the default matches the agreed bargain. A familiar spreadsheet is not authority for selecting the payment basis.
The review should also establish the operations covered and the allowance structure. An account that combines several operations may require a different sequence of inputs from a separate-operation calculation. Do not resolve that issue merely by selecting a convenient despatch option in software.
A useful method note explains the adopted basis in plain language and points to the source agreement. Where the wording is disputed, keep the alternative interpretations visible rather than presenting a single result as settled.
Reconstruct the relevant timeline
Start with the supported completion event and the remaining allowance under the reviewed account. Then identify the timeline needed to apply the adopted despatch method. The preparer should be able to explain how the relevant expiry is derived rather than enter it as an unexplained date.
The timeline should preserve any period whose treatment affects the comparison. Obtain the necessary factual or calendar information from an appropriate source. Do not assume that a day is excluded because a generic office calendar marks it differently, or that a port's usual practice automatically determines the charter's treatment.
Keep the contractual interpretation separate from the factual calendar. A verified local holiday or working pattern may be relevant, but the agreement determines its role in the calculation. The reviewer needs both the source information and the adopted rule.
If a post-completion period is uncertain, state that assumption explicitly. A hypothetical continuation used to identify expiry should not be presented as an event that actually occurred after the vessel completed the operation.
Worked fictional comparison of payment bases
This ILLUSTRATIVE example assumes that 12 countable hours of allowance remain at completion. Before the assumed laytime expiry, a single 6-hour period is expressly treated as excepted. The elapsed interval from completion to that assumed expiry is therefore 12 + 6 = 18 hours. The assumed despatch rate is USD 12,000 per day, applied pro rata using 24 hours per day.
| Assumed payment basis | Time used in payment calculation | Calculation | Amount |
|---|---|---|---|
| Working-time or laytime-saved basis | 12 hours | 12 ÷ 24 × USD 12,000 | USD 6,000 |
| All-time-saved basis | 18 hours | 18 ÷ 24 × USD 12,000 | USD 9,000 |
| Difference | 6 hours | USD 9,000 − USD 6,000 | USD 3,000 |
These are alternative expressly assumed bargains. The example does not allow the preparer to choose whichever result is preferred. It assumes the completion, remaining allowance and excepted period solely to demonstrate arithmetic, and makes no finding that either payment is due under an actual charter.
The comparison shows why a despatch review must inspect the model's basis. Every input can be entered accurately while the result remains wrong for the fixture if the account uses the wrong agreed method.
Test the model before approving the amount
| Review layer | Question to answer | Evidence or decision |
|---|---|---|
| Contractual method | Which time-saved basis applies? | Agreed wording and reviewed interpretation |
| Completion | What event supplies the starting point? | Supported operational record |
| Allowance balance | How much countable time remains? | Reviewed laytime account |
| Post-completion timeline | How is the relevant expiry derived? | Stated counting assumptions and required calendar support |
| Rate | What payment rate and unit apply? | Actual despatch arrangement |
| Arithmetic | Does the formula follow the selected basis? | Reproducible calculation |
Review the layers in that order where practical. Checking the multiplication before establishing the method can create false confidence. Conversely, once the method is settled, the arithmetic still needs verification; a correct legal premise does not prevent a spreadsheet error.
The reviewer should also inspect the software setting or formula that selects the basis. A descriptive heading may say one thing while the calculation implements another. Reproduce the material result from the stated inputs rather than relying solely on the label.
Fictional case: the template carries a different basis
In a fictional fixture, the account preparer uses a despatch workbook from a prior voyage. The completion evidence and allowance balance are entered correctly. The workbook retains its previous setting for the time-saved basis, although the new fixture uses different wording.
The draft account therefore produces a plausible amount with no obvious arithmetic error. The reviewer catches the issue only by comparing the model's method with the actual agreement. Rechecking the event times alone would not have revealed it.
The team updates the model after the relevant interpretation is confirmed and explains the change to the principal. It preserves the earlier draft and the reason for the revision so the counterparty can understand why the amount changed.
The fictional case illustrates a method mismatch rather than a data-entry error. The preventive step is to confirm the basis before using the template, then verify that the formulas implement it consistently.
Release the account with its assumptions intact
The final account should state the adopted time-saved basis, the relevant completion and expiry assumptions, and the rate. It should distinguish agreed facts from provisional inputs or disputed interpretation.
If alternative calculations are supplied, identify their purpose. An internal sensitivity comparison helps assess the significance of a dispute; it is not evidence that both methods are available under the charter. The principal should know which position the team recommends and why.
Keep payment mechanics separate from calculation approval. Even an agreed despatch amount still needs an authorised settlement process. Do not assume that the completed account itself permits a deduction from freight or another balance.
The release decision should confirm that the account is fit for its stated use: negotiation, provisional planning or an agreed payment request. A broad approval label can hide differences between those uses and encourage downstream staff to rely on a result more strongly than the review supports.
Common mistakes
The main mistake is treating all time-saved descriptions as equivalent. Another is carrying a previous workbook's method into a new fixture without checking the agreement. Confirm the basis before refining the arithmetic.
Do not confuse verified calendar information with a contractual exclusion. Avoid presenting a hypothetical expiry timeline as an actual operational event. Finally, ensure that the account's heading, software setting and formula describe the same method, with any uncertainty retained in the final explanation.
Where Zeaclub fits
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Educational information only; not legal, financial or trading advice. Contract wording and applicable rules control. Verify current requirements and obtain qualified advice before acting.
Frequently asked questions
Why can the same completion time produce different despatch amounts?
Different agreed payment bases can treat the relevant intervening periods differently. The account must apply the actual bargain. The worked comparison illustrates alternative assumptions rather than a discretionary choice between results.
Is unused allowance alone enough to approve despatch?
No. Review the agreed method, relevant timeline, rate and other applicable terms. The unused balance is an input, not a complete answer to the payment question.
Can a holiday calendar decide the calculation?
It may provide relevant factual information, but the charter determines its treatment. Verify the appropriate source and obtain advice on how the actual wording applies to the period under review.
What is the most useful final check?
Reproduce the result from the stated basis and supported inputs, then compare that method with the agreement. This checks both the arithmetic and the risk that an otherwise accurate model applies the wrong bargain.